Germany Further Aligns Foreign Direct Investment Screening Regime with EU Regulation

Morgan Lewis
Contact

Morgan Lewis

The 16th Amendment to the German Foreign Trade and Payments Ordinance entered into effect on October 28, 2020, the third step in the German government’s efforts to tighten its foreign direct investment review regime in 2020.

Earlier this year, Germany took action in aggravating its foreign direct investment (FDI) screening regime. First, the German government amended the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung (AWV) in light of the coronavirus (COVID-19) pandemic by defining certain infectious disease–related businesses as critical infrastructures. Second, the German legislator updated the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz (AWG)), incorporating in particular a consummation prohibition and a gun-jumping regime subject to criminal fines for acquisitions of certain particularly security-relevant businesses, and aligning the AWG with the EU FDI Screening Regulation, which became effective as of 11 October 2020.

The 16th Amendment to the AWV is mostly limited to making the necessary technical changes aligning the government ordinance, i.e., the AWV, with the law, i.e., the AWG. Other than expected and announced previously by the German government, the amendment does not expand the catalogue of critical infrastructures subject to FDI screening, leaving out, in particular, artificial intelligence, robotics, semiconductors, biotechnology, and quantum technology.

These categories were left out of the ordinance in this round not due to changes in policy, but rather due to timing constraints the government faced from the necessary alignment with the EU FDI Screening Regulation, which became effective on October 11, 2020, and the consultation with public stakeholders on the introduction of these categories required under German law. Thus, it can still be expected that these sectors will be included in the next update of the AWV in 2021 once the relevant stakeholders have been consulted.

Once these sectors are included in the catalogue of critical infrastructures of the AWV, acquisitions of at least 10% of the shares or assets of a German-domiciled entity operating in these sectors by a non-EEA investor would be subject to a mandatory filing obligation. We will continue to monitor developments in this respect.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morgan Lewis | Attorney Advertising

Written by:

Morgan Lewis
Contact
more
less

Morgan Lewis on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.